The Federal Reserve Proposed Capital and Reserve Rules for Stablecoin Issuers Under the GENIUS Act

The Federal Reserve Board asked for public comment on Thursday on two proposed rules that would govern payment stablecoin issuers it supervises under the GENIUS Act, the federal law establishing a regulatory framework for dollar backed stablecoins that took effect last year. The Fed's own announcement frames the proposals as filling in the operational detail the law left to regulators, covering how issuers must hold reserves, how much capital they must carry, and how quickly they must honour redemptions.

The reserve and capital rules

Cointelegraph's summary of the proposal reports that issuers would need to back every token in circulation one to one with cash, bank deposits and short term US Treasury securities, and would face a tiered operational risk capital charge: 2 percent on the first 20 billion dollars of stablecoins outstanding, 1.5 percent on the next 30 billion dollars, and 1 percent on anything above 50 billion dollars, with additional charges layered on for credit and operational risk. Redemptions would have to be processed within two business days, and issuers would need to notify the Fed and put forward a remediation plan, or begin liquidating and redeeming tokens, if their reserves ever fell short of what is required.

A framework built for stress, not just calm markets

Federal Reserve Governor Michael Barr, in a statement accompanying the proposals, said "stablecoins will only be stable if they can be reliably and promptly redeemed at par," language that ties the entire rulebook to a single test: whether a holder can get their dollar back on demand, including during periods of market stress rather than only in ordinary conditions. Issuers would also face new monthly disclosure obligations, publishing details of outstanding stablecoins and reserve composition that must be audited by a registered accounting firm and certified personally by the issuer's chief executive and chief financial officer.

A rulebook racing its own deadline

The public comment period on both proposals runs for sixty days after they are published in the Federal Register, timing that leaves little room to spare before the GENIUS Act's own compliance date of 18 January 2027, or 120 days after final rules are issued, whichever comes first. The tight sequencing means the industry the rules are meant to govern is likely to be operating under the law for months before it knows the final shape of the capital and reserve requirements it will ultimately have to meet.